<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
June 30, 1994
___________________________________________________________________
Date of Report (Date of earliest event reported)
Southwestern Life Corporation
___________________________________________________________________
(Exact name of Registrant as specified in its charter)
Delaware 1-7697 43-6069928
___________________________________________________________________
(State or other jurisdiction (Commission (IRS employer
of incorporation file no.) identification no.)
100 Mallard Creek Road, Louisville, Kentucky 40207
___________________________________________________________________
(Address of principal executive offices, including zip code)
(502) 894-2100
___________________________________________________________________
(Registrant's telephone number, including area code)
Not Applicable
___________________________________________________________________
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
ITEM 5. OTHER EVENTS.
On June 15, 1993, Southwestern Life Corporation (former
ly, I.C.H. Corporation) ("SLC"), Consolidated National Corporation
("CNC") and Consolidated Fidelity Life Insurance Company ("CFLIC")
entered into an agreement (the "1993 Agreement") under which
(a) SLC was authorized, and undertook the obligation, to negotiate
the termination of retrocession agreements (the "Retrocession
Agreements") pursuant to which CFLIC reinsured certain annuity
business written by Southwestern Life Insurance Company ("South-
western Life"), a subsidiary of SLC, and Bankers Life and Casualty
Company ("BLC"), a former subsidiary of SLC; and (b) SLC invested
assets (consisting of a limited partnership interest, that has
since been liquidated, and 83% of the outstanding stock of I.C.H.
Funding Corp.) to acquire preferred stock of CFLIC, with a stated
value of $63 million, which preferred stock was to be repurchased
by CFLIC immediately following termination of the Retrocession
Agreements. The Retrocession Agreements were entered into in 1990,
in conjunction with the Company's sale of Marquette National Life
Insurance Company ("Marquette") to CNC and its stockholders. Under
the Retrocession Agreements, Employers Reassurance Corporation, an
independent third party reinsurer ("ERC"), retroceded to CFLIC
certain annuity business which was reinsured with ERC by each of
Southwestern Life and BLC.
On June 30, 1994, agreements were executed pursuant to
which the Retrocession Agreements were terminated, and the business
reinsured thereunder was recaptured, effective as of April 1, 1994.
Immediately prior to the termination of the Retrocession Agree-
ments, Union Bankers Insurance Company ("Union Bankers"), an
indirect subsidiary of SLC, purchased 100% of the outstanding stock
of Marquette for its estimated fair value of $8,215,354, pursuant
to an agreement entered into on June 3, 1994. The purchase was made
utilizing available cash at Union Bankers. The fair value of
Marquette was based on the fair value of its underlying assets and
liabilities, plus an additional $2,120,172, principally reflecting
the fair value of Marquette's various state insurance licenses as
determined by an independent actuarial firm. At June 30, 1994,
Marquette had assets, primarily U.S. Treasury obligations, totaling
approximately $6,415,000. Following completion of the terminations,
on June 30, 1994, CFLIC repurchased the shares of its preferred
stock held by SLC by transferring to SLC the senior secured loan of
SLC, with an outstanding principal balance of $30 million; 541,563
shares of Series 1984-A Preferred Stock of SLC, stated value
$22,241,992, constituting all of the shares of that series then
outstanding; 140,000 shares of $4.50 Redeemable Preferred Stock,
Series 1987-B of SLC, stated value $7,000,000, constituting all of
the shares of that series then outstanding; 620,423 shares of
Common Stock of SLC; and a U.S. Treasury Note, par value
$1,050,000.
The termination of the Retrocession Agreements and
CFLIC's repurchase of its preferred stock are not expected to have
a significant effect on SLC's total consolidated assets or common
<PAGE>
stockholders' equity. On a prospective basis, the retirement of
SLC's remaining senior secured loan and the two classes of SLC
preferred stock are expected to result in annual savings of
interest expense and preferred dividend requirements totaling in
excess of $5.0 million.
The termination of the Retrocession Agreement relating to
the business written by Southwestern Life was accomplished pursuant
to a Termination and Recapture Agreement executed by ERC, CFLIC,
Southwestern Life and SLC. With the termination, Consolidated
Fidelity transferred assets with a fair value equal to the reserve
liabilities being recaptured, net of the ceding fees payable. Due
primarily to a requirement by insurance regulatory authorities to
transfer such investments upon termination of the Retrocession
Agreements at their fair value, SLC increased its basis in the
CFLIC preferred stock by investing an additional $26,211,995
(including $21,077,870 cash and a $5,134,125 receivable) immediate-
ly prior to the terminations to enable CFLIC to have sufficient
assets (other than the SLC securities being transferred to SLC upon
redemption of the CFLIC preferred stock) to complete the termina-
tions. A substantial portion of such amount was attributable to a
decline in the fair value of the 83% interest in I.C.H. Funding
Corp. subsequent to SLC's transfer of such investment to CFLIC in
June 1993. As previously reported in SLC's 1993 Annual Report on
Form 10-K, the 1993 Agreement contemplated that SLC would benefit
or suffer the consequences to the extent of any appreciation or
depreciation in the value of the assets transferred to CFLIC. The
assets transferred to Southwestern Life by CFLIC upon termination
of the Retrocession Agreement relating to the business written by
Southwestern Life included, in part, the additional $21,077,870 of
cash.
At March 31, 1994, the amount of Southwestern Life's
reserve liabilities reinsured by CFLIC totaled $323,305,188, of
which $107,162,798 was recaptured by Southwestern Life. After
deduction of a $13,221,227 ceding fee paid by Southwestern Life,
CFLIC transferred to Southwestern Life assets with an estimated
fair value of $93,941,571. The assets transferred to Southwestern
Life consisted of cash, short-term investments and marketable fixed
maturity investments (fair value of $25,455,251), CFLIC's invest-
ments in I.C.H. Funding Corp. and certain pass-through certificates
issued by a special purpose trust sponsored by Fund America
Investors Corporation ("FAIC II"), (estimated fair value of
$12,527,888), collateral loans due from James M. Fail and CFSB
Corporation (the "Fail/CFSB Loans") totaling $50,639,572, mortgage
loans totaling $5,239,652, and a common stock investment of
$79,208. Rather than transferring to Southwestern Life certain
real estate and a collateral loan that Southwestern Life could have
required CNC and CFLIC to repurchase pursuant to the 1993 Agree-
ment, on June 15, 1995, the parties agreed to increase the amount
of the Fail/CFSB Loans being transferred, to 100% of CFLIC's
interest therein.
<PAGE>
The remaining reserve liabilities of Southwestern Life
that were reinsured by CFLIC, totaling $216,142,390 as of March 31,
1994, were recaptured by, and remain reinsured with, ERC. After
deduction of a $20,669,773 ceding fee paid by ERC, CFLIC trans-
ferred to ERC assets, consisting primarily of cash, short-term
investments and marketable fixed maturity investments, with an
estimated fair value of approximately $195,472,617. The reinsur-
ance agreement between ERC and Southwestern Life, and related
documents, relating to the business recaptured by ERC were amended
to, among other things, permit ERC to recover, out of the future
profits of the reinsured business, the ceding fee it paid CFLIC,
together with interest at 2%.
The amount of the ceding fees paid to CFLIC in connection
with the recapture of the business written by Southwestern Life was
determined by management of SLC utilizing the methodology developed
by an independent actuarial firm prior to the execution of the 1993
Agreement, with appropriate adjustments in assumptions to reflect
changes in market interest rates and other factors. The fair
values of marketable fixed maturity investments were determined
based on quoted market prices as published by nationally recognized
pricing services as of March 31, 1994. The fair value of CFLIC's
investments in I.C.H. Funding Corp. and FAIC II were determined by
an independent investment banking firm, based on the value of their
respective underlying assets as of June 30, 1994. The value of the
remaining assets were transferred at their book value.
Pursuant to the 1993 Agreement, SLC agreed to bear the
federal income tax consequences resulting from the termination of
the Retrocession Agreements. By letter dated June 30, 1994, SLC,
CNC and CFLIC clarified the obligations of SLC to indemnify CNC and
CFLIC for tax liabilities of CFLIC and Marquette arising through
June 30, 1994, and they entered into an escrow agreement pursuant
to which $8,825,000 of cash which SLC was to have received upon
CFLIC's repurchase of its preferred stock was deposited in escrow
as a source of funds for the payment of taxes for which SLC is
responsible. With the payment of such tax liabilities, SLC will be
entitled to all tax refunds to which CFLIC is entitled through the
carryback of capital losses resulting from the termination of the
Retrocession Agreements or as a result of any redetermination of
CFLIC's tax liabilities through the first taxable period of CFLIC
and Marquette ending after such termination. SLC management has
estimated that CFLIC will be entitled to tax refunds totaling
approximately $5.8 million through the carryback of capital losses.
Upon collection of the tax refund, SLC will utilize a portion of
the proceeds to satisfy the remaining $5,134,125 receivable held by
CFLIC.
On June 30, 1994, SLC, CNC and CFLIC also entered into an
Amendment to Agreement, whereby they amended the 1993 Agreement to,
among other things, substitute and reconcile the assets and
earnings thereon that CFLIC was entitled to retain following the
termination of the Retrocession Agreements and the repurchase of
the CFLIC preferred stock. These assets and earnings had an
<PAGE>
aggregate statutory value, on CFLIC's books, of approximately $75.4
million. Under the 1993 Agreement, SLC was granted the option, in
the future, either to purchase shares of common stock of Nacolah
Holding Corporation held by CFLIC at its cost or to receive
$775,000 from CNC and CFLIC. The Amendment to Agreement also
granted CNC and CFLIC the right, during the period from June 30,
1994 until October 31, 1994, to pay SLC $775,000 to terminate this
option.
CFLIC is owned by CNC and CNC's three stockholders, one
of whom is C. Fred Rice, an officer and director of SLC. Prior to
February 11, 1994, CNC held shares of Class B Common Stock of SLC
entitling it to elect 75% of the directors of SLC. In addition,
CNC provided management and consulting services to SLC and its
subsidiaries pursuant to a Management and Consulting Agreement and
both CNC and CFLIC beneficially owned in excess of 5% of the Common
Stock of SLC. On February 11, 1994, SLC repurchased the Class B
Common Stock and terminated its Management and Consulting Agreement
with CNC, concurrently with CNC's sale of Common Stock of SLC to
Stephens Inc. and Torchmark Corporation. The February 11, 1994
transactions reduced the amount of Common Stock of SLC beneficially
owned by CNC and its affiliates to 6.73%. The transactions
consummated on June 30, 1994, described above, further reduced the
amount of Common Stock of SLC beneficially owned by CNC and its
affiliates to 2.12%.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION,
AND EXHIBITS.
The description of the documents in the Index of Exhibits on
page 7 of this Current Report on Form 8-K is incorporated by
reference.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned hereunto duly authorized.
SOUTHWESTERN LIFE CORPORATION
By: /s/ Robert L. Beisenherz
________________________________
Robert L. Beisenherz,
Chairman of the Board, Chief
Executive Officer and President
Date: July 15, 1994
<PAGE>
<PAGE>
INDEX TO EXHIBITS
_________________
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NO.
------- ----------- ----------
<S> <C> <C>
2.1 Stock Purchase Agreement dated June 29,
1990, among Consolidated National Cor-
poration, Robert T. Shaw and Bankers
Life and Casualty Company with respect
to all outstanding capital stock of
Marquette National Life Insurance Com-
pany, including Exhibit 1.35 thereto
governing the coinsurance relationship
between Southwestern Life Insurance
Company and Marquette National Life
Insurance Company (filed as Exhibits 2.1
and 2.3 to the Registrant's Report on
Form 10-Q for the quarter ended June 30,
1990, and incorporated herein by refer-
ence) . . . . . . . . . . . . . . . . .
2.2 Coinsurance Annuity Reinsurance Agree-
ment -- October 1, 1990, for Bankers
Life and Casualty Company (filed as
Exhibit 19-1 to Registrant's Current
Report on Form 8-K dated November 9,
1990, and incorporated herein by refer-
ence) and amendments thereto (filed as
Exhibit 2.11 to the Registrant's Annual
Report on Form 10-K for year ended
December 31, 1991, and Exhibit 2.11 to
the Registrant's Annual Report on Form
10-K for the year ended December 31,
1992, and incorporated herein by refer-
ence) . . . . . . . . . . . . . . . . .
2.3 Coinsurance Annuity Retrocession Agree-
ment (Bankers Business) -- October 1,
1990 for Marquette National Life Insur-
ance Company (filed as Exhibit 19-2 to
the Registrant's Current Report on Form
8-K dated November 9, 1990, and incorpo-
rated herein by reference) and amend-
ments thereto (filed as Exhibit 2.12 to
the Registrant's Annual Report on Form
10-K for year ended December 31, 1991,
and Exhibit 2.12 to the Registrant's
Annual Report on Form 10-K for the year
ended December 31, 1992, and incorporat-
ed herein by reference) . . . . . . . .
<PAGE>
2.4 Coinsurance Annuity and Supplemental
Contract Reinsurance Agreement II --
June 30, 1990, for Southwestern Life
Insurance Company (filed as Exhibit 19-3
to the Registrant's Current Report on
Form 8-K dated November 9, 1990, and
incorporated herein by reference) and
amendments thereto (filed as Exhibit
2.13 to the Registrant's Annual Report
on Form 10-K for year ended December 31,
1991, Exhibit 2.13 to the Registrant's
Annual Report on Form 10-K for the year
ended December 31, 1992, and Exhibit
2.18 to the Registrant's Annual Report
on Form 10-K for the year ended Decem-
ber 31, 1993, and incorporated herein by
reference). . . . . . . . . . . . . . .
2.5 Coinsurance Annuity and Supplementary
Contract Retrocession Agreement II --
June 30, 1990, for Marquette National
Life Insurance Company (filed as Exhibit
19-4 to the Registrant's Current Report
on Form 8-K dated November 9, 1990, and
incorporated herein by reference) and
amendments thereto (filed as Exhibit
2.14 to the Registrant's Annual Report
on Form 10-K for year ended December 31,
1991, and Exhibit 2.14 to the Regis-
trant's Annual Report on Form 10-K for
the year ended December 31, 1992, and
Exhibit 2.19 to the Registrant's Annual
Report on Form 10-K for the year ended
December 31, 1993, and incorporated
herein by reference). . . . . . . . . .
2.17 Agreement, dated June 15, 1993, among
I.C.H. Corporation, Consolidated Nation
al Corporation and Consolidated Fidelity
Life Insurance Company (filed as Exhibit
2.1 to the Registrant's Current Report
on Form 8-K dated June 15, 1993 and
incorporated herein by reference) . . .
2.18 Agreement, dated June 3, 1994, between
Consolidated Fidelity Life Insurance
Company and Union Bankers Insurance
Company . . . . . . . . . . . . . . . .
2.19 Termination and Recapture Agreement
among Consolidated Fidelity Life Insur-
ance Company, Southwestern Life Corpora-
<PAGE>
tion, Southwestern Life Insurance Compa-
ny and Employers Reassurance Corpora-
tion. . . . . . . . . . . . . . . . . .
2.20 Amendment to Agreement, effective
April 1, 1994, among Consolidated Na-
tional Corporation, Consolidated Fideli-
ty Life Insurance Company and Southwest-
ern Life Corporation. . . . . . . . . .
2.21 Letter agreement, dated June 30, 1994,
among Southwestern Life Corporation,
Consolidated Fidelity Life Insurance
Company and Consolidated National Corpo-
ration. . . . . . . . . . . . . . . . .
2.22 Escrow Agreement, dated June 30, 1994,
among Southwestern Life Corporation,
Consolidated Fidelity Life Insurance
Company and Mid-America Bank of Louis-
ville and Trust Company . . . . . . . .
2.23 Amendment No. 4 to the Reinsurance
Agreement identified as Exhibit 2.4
above . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 2.18
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and
entered into by and between I.C.H. CORPORATION, a Delaware
corporation ("ICH"), CONSOLIDATED FIDELITY LIFE INSURANCE COMPANY,
a Kentucky corporation (CFL), and UNION BANKERS INSURANCE COMPANY,
a Texas corporation ("UBI"),
W-I-T-N-E-S-S-E-T-H:
WHEREAS, CONSOLIDATED NATIONAL CORPORATION, a Kentucky
corporation (CNC), owns a majority of the issued and outstanding
shares of capital stock of CFL, which owns all of the issued and
outstanding shares of capital stock of MARQUETTE NATIONAL LIFE
INSURANCE COMPANY, a Kentucky corporation (MNL); and
WHEREAS, UBI and SOUTHWESTERN LIFE INSURANCE COMPANY, a Texas
corporation (SWL), are each indirect wholly-owned subsidiaries of
ICH; and
WHEREAS, prior to June 15, 1993, CFL entered into a retroces-
sion reinsurance agreement (CFL Retrocession Agreement) with
EMPLOYERS REASSURANCE CORPORATION (ERC), a Kansas corporation,
under which ERC ceded and CFL assumed certain in-force insurance
business which ERC previously assumed from SWL (SWL Reinsurance
Agreement); and
WHEREAS, on June 15, 1993, ICH, CNC and CFL entered into an
agreement (the CFL Agreement) under which, among other things, ICH
assumed the obligation to negotiate the termination of the CFL
Retrocession Agreement and agreed to cause its subsidiaries to
(i) manage CFL's and MNL's investment portfolios, (ii) prepare
CFL's and MNL's statutory financial statements and (iii) ensure
CFL's and MNL's compliance with regulatory requirements; and
WHEREAS, the SWL Reinsurance Agreement will be partially
recaptured at the same time the CFL Retrocession Agreement is
terminated; and
WHEREAS, upon the termination of the CFL Retrocession
Agreement and the partial recapture of the SWL Reinsurance
Agreement, CFL must transfer assets to SWL with a fair market value
equal to the liabilities being assumed by SWL as a result of such
termination and partial recapture (Terminations); and
WHEREAS, ICH has proposed that upon the Terminations, that CFL
sell all of the shares of MNL to UBI with the proceeds of the sale
to be included in the assets to be transferred by CFL to SWL; and
WHEREAS, MNL's authorized and issued capital stock currently
consists of 100,000 shares of $1.00 par value Class A voting common
stock and 2,000,000 shares of $1.00 par value Class B non-voting
common stock but at the time of the Closing (as hereinafter
defined) will consist of 2,100,000 shares of $12.00 par value
voting common stock of which 175,000 shares will be issued and
outstanding (the MNL Shares); and
WHEREAS, CFL is willing to sell the MNL to Shares to UBI and
UBI is willing to purchase the MNL Shares from CFL on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual promises of the parties hereto, they hereby covenant and
agree as follows:
1. PURCHASE AND SALE OF STOCK. CFL agrees to sell the MNL
Shares to UBI and UBI agrees to purchase the MNL Shares from CFL.
2. CONSIDERATION. As consideration for the sale, UBI agrees
to pay to CFL the sum of $8,215,354 cash.
3. CLOSING. This Agreement shall be closed immediately
prior to the closing of the CFL Agreement; provided, however, that
for accounting purposes the closing shall be deemed to have
occurred on April 1, 1994. At the closing of this Agreement (the
Closing), CFL agrees to deliver to UBI stock certificates repre-
senting the MNL Shares with attached stock powers executed on
behalf of CFL transferring the MNL Shares of record to UBI and UBI
agrees to pay to CFL the sum of $8,215,354 cash.
4. CFL'S REPRESENTATION AND WARRANTIES. CFL represents and
warrants to UBI and ICH, as follows:
(a) CFL and MNL are corporations duly organized, validly
existing and in good standing under the laws of the State of
Kentucky and CFL has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transac-
tions contemplated hereby.
(b) At the Closing, the authorized capital stock of MNL
will consist of 2,100,000 shares of $12.00 par value common stock,
of which 175,000 shares will be issued and outstanding and owned of
record by CFL.
(c) At the Closing, CFL will be the lawful owner of the
MNL Shares with good and marketable title thereto, free and clear
of all liens and encumbrances.
5. ICH'S REPRESENTATIONS AND WARRANTIES. ICH represents to
UBI and CFL that MNL's 1993 Annual Financial Statement and March
31, 1994 Quarterly Financial Statement filed with the Kentucky
Insurance Department were prepared in accordance with statutory
accounting principles prescribed or permitted by the Kentucky
Insurance Department and present fairly the financial condition and
results of operations of MNL at and for each of the periods covered
thereby.
6. UBI'S REPRESENTATIONS AND WARRANTIES. UBI represents and
warrants to CFL and ICH that UBI is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Texas and has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the
transactions contemplated hereby.
7. EFFECTIVENESS OF AGREEMENT. The effectiveness of this
Agreement is expressly conditioned upon the receipt of all required
regulatory approvals, consents and/or exemptions.
8. ASSIGNMENT. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties
hereto.
9. MISCELLANEOUS. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, shall not be modified or amended except in writing signed
on behalf of the parties hereto and may be executed in separate
counterparts, each of which shall constitute an original copy
hereof but all of which together shall constitute a single
instrument.
EXECUTED this 3rd day of June, 1994
I.C.H. Corporation
By: /s/ Robert L. Beisenherz
__________________________________
Robert L. Beisenherz
Chairman of the Board and
Chief Executive Officer
Union Bankers Insurance Company
By: /s/ W. Sherman Lay
__________________________________
W. Sherman Lay
Executive Vice President
Consolidated Fidelity Life Insurance
Company
By: /s/ Jerry W. Rice
__________________________________
Jerry W. Rice
Vice President
<PAGE>
<PAGE>
EXHIBIT 2.19
TERMINATION AND RECAPTURE AGREEMENT
THIS TERMINATION AND RECAPTURE AGREEMENT is made and entered
into by and between EMPLOYERS REASSURANCE CORPORATION, a Kansas
corporation ("ERC"), CONSOLIDATED FIDELITY LIFE INSURANCE COMPANY,
a Kentucky corporation ("CFL"), SOUTHWESTERN LIFE INSURANCE
COMPANY, a Texas corporation ("SWL") and SOUTHWESTERN LIFE
CORPORATION (formerly named I.C.H. Corporation), a Delaware
corporation ("SLC"),
W-I-T-N-E-S-S-E-T-H:
WHEREAS, effective June 30, 1990, ERC and SWL entered into a
Coinsurance Annuity and Supplemental Contract Reinsurance Agreement
II, as amended by Amendments Nos. 1, 2 and 3 thereto, (the
"Reinsurance Agreement") under which SWL ceded and ERC assumed the
liabilities on certain annuities and supplemental contracts written
by SWL consisting of immediate annuities and supplemental contracts
(the "PPA Business") and Flexible Annuities (herein so called); and
WHEREAS, effective June 30, 1990, ERC and Marquette National
Life Insurance Company, a Kentucky corporation ("MNL") entered into
a Coinsurance Annuity and Supplemental Contract Retrocession
Agreement II, as amended by Amendments Nos. 1 through 5 thereto,
(the "Retrocession Agreement") under which ERC retroceded and MNL
assumed the liabilities on the PPA Business and the Flexible
Annuities assumed by ERC under the Reinsurance Agreement; and
WHEREAS, in Amendment No. 3 to the Retrocession Agreement, CFL
was substituted for MNL, CFL assumed all of MNL's obligations under
the Retrocession Agreement and MNL was released from all its
obligations under the Retrocession Agreement; and
WHEREAS, ERC and CFL desire to terminate the Retrocession
Agreement effective April 1, 1994 pursuant to the terms and
conditions hereinafter set forth; and
WHEREAS, simultaneous with the termination of the Retrocession
Agreement, SWL desires to recapture, effective April 1, 1994, the
PPA Business from ERC with ERC continuing to assume the liabilities
on the Flexible Annuities under the Reinsurance Agreement, as
amended; and
WHEREAS, upon termination of the Retrocession Agreement and in
connection with ERC's recapture of the Flexible Annuities and the
PPA Business, ERC will assume liabilities of $323,305,188 and will
be entitled to receive assets, net of a $33,891,000 recapture fee,
with an aggregate fair value and/or fair market value as of March
31, 1994 in the amount of $289,414,188; and
WHEREAS, upon recapture of the PPA Business, SWL will assume
liabilities of $107,162,798 and will be entitled to receive assets,
net of a $13,221,227 recapture fee, with an aggregate fair value
and/or market value as of March 31, 1994 in the amount of
$93,941,571; and
NOW, THEREFORE, in consideration of the premises and the
mutual promises of the parties hereto, they hereby covenant and
agree as follows:
1. TERMINATION. ERC and CFL agree that subject to compli-
ance with the terms and conditions hereinafter set forth, the
Retrocession Agreement is hereby terminated effective April 1,
1994.
2. CLOSING. Unless otherwise mutually agreed to by the
parties hereto, this Termination and Recapture Agreement shall be
closed (the "Closing") at the offices of CFL in Louisville,
Kentucky at 10:00 A.M. (local time) on June 30, 1994. At the
Closing:
(a) CFL, in full satisfaction of all of its liabilities under
the Retrocession Agreement with respect to the Flexible Annuities,
shall transfer, assign and convey to or for the benefit of ERC, net
of a recapture fee in the amount of $20,669,773, the assets listed
under the column titled "ERC/SWL Portfolio" in Exhibit "A" hereto,
in each case adjusted for gains, losses, income and proceeds
derived therefrom, and the reinvestment thereof, on and after April
1, 1994.
(b) CFL, in full satisfaction of all its liabilities under
the Retrocession Agreement with respect to the PPA Business and in
full satisfaction of all of ERC's liabilities under the Reinsurance
Agreement with respect to the PPA Business, shall transfer, assign
and convey to SWL, net of a recapture fee in the amount of
$13,221,227, the assets listed under the column titled "PPA
Business" in Exhibit "A" hereto, subject to adjustment as provided
in paragraph 4(b) below, in each case adjusted for gains, losses,
income and proceeds derived therefrom, and the reinvestment
thereof, on and after April 1, 1994.
(c) SWL and ERC, if they have not previously done so, shall
execute and deliver Amendment No. 4 to the Reinsurance Agreement in
form and substance mutually satisfactory to SWL and ERC.
(d) CFL, SWL, ERC and The First National Bank of Chicago
("Bank"), if they have not previously done so, shall enter into an
Amended and Substituted Escrow Agreement in form and substance
mutually satisfactory to CFL, SWL, ERC and Bank.
(e) ERC and SLC shall enter into an agreement in form and
substance satisfactory to ERC and SLC terminating their letter
agreement dated March 8, 1994 and their agreement dated March 10,
1993 relating to risk charges.
3. CONDITIONS TO CLOSING. Notwithstanding the foregoing,
this Agreement shall not be Closed unless and until all of the
following events shall have occurred:
(a) All regulatory approvals, consents and exemptions
required to consummate the transactions contemplated herein have
been obtained.
(b) The applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 has expired or terminated.
(b) The sale of all of the shares of MNL by CFL to Union
Bankers Insurance Company for $8,215,354 has been effected.
(c) The Coinsurance Annuity Reinsurance Agreement entered
into by and between ERC and Bankers Life and Casualty Company, an
Illinois corporation ("BLC"), effective October 1, 1990, as
amended, has been or is simultaneously terminated.
(d) The Coinsurance Annuity Retrocession Agreement relating
to BLC's business entered into by and between ERC and MNL effective
October 1, 1990, as amended, has been or is simultaneously
terminated.
(e) The Trust Agreement dated April 22, 1991 entered into by
and among ERC, MNL and Bank has been or is simultaneously terminat-
ed.
4. MISCELLANEOUS.
(a) CFL, ERC, SWL and SLC each agrees on its own behalf to
use its reasonable best efforts to satisfy the conditions set forth
herein to the Closing in so far as such matters are within its
control.
(b) As soon as commercially feasible, the parties shall
obtain a determination from a mutually acceptable independent third
party of the fair value, as of June 30, 1994, of the investments in
Fund America Investors Corporation and I.C.H. Funding Corp.
reflected in Exhibit "A". To the extent the aggregate fair value
of such investments, as so determined, is less than the aggregate
estimated value of such investments as of March 31, 1994, as
reflected in Exhibit "A" (the "Deficit"), SLC shall, within two
business days following such determination, or, if later, at the
Closing, pay to CFL and CFL, in turn, shall immediately pay to SWL,
cash in an amount equal to such Deficit together with any income
earned or imputed thereon subsequent to March 31, 1994.
(c) CFL agrees that ERC and SWL may inspect the books and
records of CFL relating to the Retrocession Agreement and the
assets listed in Exhibit "A" hereto at any time during normal
business hours.
(d) ERC and SWL each agrees on its own behalf to capitalize
for federal income tax purposes the policy acquisition expenses
incurred by it with respect to the business covered by the
Retrocession Agreement and the Reinsurance Agreement, as the case
may be, without regard to the general deduction limitations of
Section 848(c)(1) of the Internal Revenue Code of 1986.
(e) CFL, ERC, SWL and SLC each agrees on its own behalf to
perform all acts which are reasonably necessary to consummate the
transactions contemplated herein.
(f) CFL, ERC, SWL and SLC agree that this Termination and
Recapture Agreement may be signed in several counterparts, each of
which shall constitute an original copy hereof but all of which
together shall constitute a single instrument.
(g) The terms of this Termination and Recapture Agreement
shall supersede any inconsistent or contrary provisions of the
Retrocession Agreement.
IN WITNESS WHEREOF the parties hereto have set their hands on
the dates indicated below.
EMPLOYERS REASSURANCE CONSOLIDATED FIDELITY
CORPORATION LIFE INSURANCE COMPANY
By:/s/ James D. Maughn By:/s/ Jerry W. Rice
--------------------- ---------------------------
Title: SVP & Actuary Title: Vice President
------------------ --------------------
Date: 6/29/94 Date: 6/30/94
------------------- --------------------
SOUTHWESTERN LIFE SOUTHWESTERN LIFE
INSURANCE COMPANY CORPORATION
By:/s/ John T. Hull By: /s/ John T. Hull
--------------------- ------------------------
Title: Exec. Vice Pres. Title: Exec. Vice Pres.
------------------ ---------------------
Date: 6/29/94 Date: 6/29/94
------------------ ---------------------
<PAGE>
<PAGE>
EXHIBIT 2.20
AMENDMENT TO AGREEMENT
This Amendment to Agreement ("the Agreement") is made and
entered into effective as of April 1, 1994, between Southwestern
Life Corporation, a Delaware corporation, formerly known as I.C.H.
Corporation ("SLC"), Consolidated National Corporation, a Kentucky
corporation ("CNC") and Consolidated Fidelity Life Insurance
Company, a Kentucky insurance company ("CFLIC").
INTRODUCTORY PROVISIONS
The following provisions are true and correct and form the
basis for and are a part of this Agreement.
A. The parties hereto are parties to that certain Agreement
dated as of June 15, 1993, a copy of which is attached hereto ("the
Prior Agreement").
B. The parties to the Prior Agreement desire to amend and
modify certain terms and provisions of the Prior Agreement having
determined that it is mutually advantageous to do so, upon and
subject to the terms and conditions and for the considerations set
forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and the benefits to be derived herefrom
the parties hereto covenant and agree as follows:
1. DEFINITIONS. All terms used in this Agreement with
initial capitalized letters and not otherwise separately
defined herein shall have the meanings given to them in
the Prior Agreement.
2. AMENDMENT TO SCHEDULE III, EXCEPTED ASSETS. Schedule
III, Excepted Assets, attached to and made a part of the
Prior Agreement be and the same is hereby amended by
striking the entire Schedule III and substituting
therefor the Schedule III, Reconciliation of Excepted
Assets and Earnings, which is attached hereto and
incorporated herein and in the Prior Agreement by this
reference.
3. DELETION OF SPECIAL ASSETS. Section 9.3 of the Prior
Agreement and Schedule IV, Special Assets, which is
attached to and made a part of the Prior Agreement, be
and the same are hereby deleted in their entirety.
4. DELETION OF LITIGATION INDEMNITY. Article 10 of the
Prior Agreement be and the same is hereby amended by
striking the first paragraph thereof in its entirety.
5. DELIVERY OF TREASURY NOTE. In addition to all other
assets to be transferred by CFLIC pursuant to the Prior
Agreement, as amended, CFLIC shall, upon its surrender of
its Certificate of Authority to the Kentucky Department
of Insurance, obtain the return to CFLIC from the State
of Kentucky that certain U.S. Treasury Note (the "Note")
par value $1,050,000, cusip number 912-827-C6-7 previous-
ly deposited with the State of Kentucky, and promptly
endorse, assign, transfer and deliver, the Note to SLC.
If for any reason CFLIC is unable to convey the Note to
SLC, CFLIC shall promptly present the Note for payment in
full to an authorized paying agent of the United States,
and shall immediately thereafter pay to SLC in cash the
entire sum of principal and accrued interest received on
the Note by CFLIC after the date hereof.
6. NACOLAH OPTION. During the period commencing June 30,
1994 and ending on October 31, 1994, CNC and CFLIC shall
have the option to pay to SLC in cash the sum of $775,000
and upon such payment terminate all rights of SLC under
SECTION 9.4 of the Prior Agreement with respect to the
stock of Nacolah Holding Corporation. If CNC or CFLIC
does not elect to exercise said option on or before
October 31, 1994, neither CNC nor CFLIC shall thereafter
have the right to terminate SLC's rights under SECTION
9.4 of the Prior Agreement.
7. NO OTHER AMENDMENTS. Except as expressly provided for in
this Agreement, all of the terms and provisions of the
Prior Agreement remain in full force and effect and
without any modification or amendment thereto.
8. COUNTERPARTS. The Agreement may be executed in any
number of multiple counterparts and by different parties
on separate counterparts, and each such counterpart shall
be deemed an original, but all such counterparts together
shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed to be effective on the date first set forth above.
SLC:
Southwestern Life Corporation:
By: /s/ Robert L. Beisenherz
_____________________________________
Robert L. Beisenherz
Chairman of the Board, Chief
Executive Officer and President
CNC:
Consolidated National Corporation
By: /s/ Robert T. Shaw
_____________________________________
Robert T. Shaw
President
CFLIC:
Consolidated Fidelity Life
Insurance Company
By: /s/ Robert L. Beisenherz
_____________________________________
Jerry W. Rice
Chairman
<PAGE>
<PAGE>
EXHIBIT 2.21
SOUTHWESTERN LIFE CORPORATION
500 North Akard Street
Dallas, Texas 75201
June 30, 1994
Consolidated National Corporation
4211 Norbourne Boulevard
Louisville, Kentucky 40207
Consolidated Fidelity Life Insurance Company
4211 Norbourne Boulevard
Louisville, Kentucky 40207
RE: AGREEMENT DATED JUNE 15, 1993 - TAX MATTERS
Gentlemen:
Reference is hereby made to that certain Agreement dated June
15, 1993 (the "1993 Agreement") by and among I.C.H. Corporation,
now known as Southwestern Life Corporation, a Delaware corporation
("ICH"), Consolidated National Corporation, a Kentucky corporation
("CNC") and Consolidated Fidelity Life Insurance Company, a
Kentucky insurance company ("CFLIC"). Except as otherwise provided
herein, all capitalized terms used in this letter agreement shall
have the meanings indicated in the 1993 Agreement. ICH desires to
clarify certain obligations and rights of the parties relating to
Taxes under the 1993 Agreement. The parties recognize that any
liability for Taxes of CFLIC and Marquette referred to herein shall
include Taxes of any of CFLIC, Marquette, or any subsidiary of
either of them and shall include any such Taxes imposed upon any
successor in interest thereto, including but not limited to CNC.
The terms CFLIC and Marquette include their respective successors
in interest.
At its sole cost and expense, ICH shall timely prepare and
file all returns applicable to Taxes of CFLIC and Marquette for all
taxable periods prior to and including and ending with the first
taxable period of CFLIC and Marquette, respectively, ending after
the date hereof (collectively hereinafter, the "Indemnified
Periods"). CNC and CFLIC shall cooperate with ICH in connection
therewith. Other than for Taxes on the earnings from the Excepted
Assets that accrue after June 30, 1994 (the "Excepted Assets
<PAGE>
Consolidated National Corporation
Consolidated Fidelity Life Insurance Company
June 30, 1994
Page 2
Earnings"), ICH shall indemnify and hold CNC and CFLIC harmless
from any Taxes of CFLIC and Marquette for the Indemnified Periods,
which shall include but not be limited to any Taxes attributable to
the Recaptures or the redemption of the CFLIC Securities. ICH has
estimated that the liability of CFLIC and Marquette for Taxes for
the calendar year 1993 and for the period January 1, 1994 through
and including June 30, 1994 (exclusive of any refund of Taxes
attributable to any carryback of any loss), after taking into
account estimated Tax payments which have been made, is $8,825,000
(the "Tax Liability Estimate"). ICH recognizes that Taxes have
been previously withheld from the Excepted Assets Earnings in
calculating the Excepted Assets Earnings to which CNC is entitled
for the period July 1, 1993 through June 30, 1994 and that,
accordingly, the Tax Liability Estimate shall include an amount for
Taxes on such Excepted Assets Earnings for such period. Simulta-
neous with the closing of the Recaptures and the redemption of the
CFLIC Securities, ICH shall deposit with Mid-America Bank and Trust
Company of Louisville, as escrow agent ("Escrow Agent"), immediate-
ly available federal funds in an amount equal to the Tax Liability
Estimate, which amount shall be held and disbursed as a fund (the
"Escrow Fund") by Escrow Agent pursuant to this letter agreement
and an Escrow Agreement to be executed by ICH, CFLIC and the Escrow
Agent, in the form attached hereto as Exhibit A.
Upon the earlier of the completion for filing of each of the
Tax returns for CFLIC and Marquette for the applicable Indemnified
Periods, or three (3) Business Days prior to the respective due
date thereof (or if estimated Tax payments are required prior to
such filing, not later than three (3) Business Days prior to the
due date thereof), CFLIC shall direct the Escrow Agent to disburse
to CFLIC an amount equal to the Taxes payable upon the filing of
such return (or the applicable due date of such estimated Tax
payment if earlier) from and out of the Escrow Fund, which amount
disbursed shall be promptly paid by CFLIC to the applicable Tax
authority. If, upon the filing of any Tax return for CFLIC and/or
Marquette for the Indemnified Periods, or upon audit or any
redetermination of Taxes by any applicable Tax authority, the
actual liability for Taxes of CFLIC and Marquette for the Indemni-
fied Periods (exclusive of any refund of Taxes attributable to any
carryback of any loss arising during any Indemnified Period) shall
exceed the then balance of the Escrow Fund (including any earnings
thereon), ICH shall contribute such excess to CFLIC (or its
successor in interest) as a return of excess value received for the
redemption of the CFLIC Securities, which amount shall be paid by
CFLIC (or its successor in interest) to the appropriate Tax
authority (if not previously so paid prior to such receipt). If
such contribution shall be determined to be subject to Tax, such
<PAGE>
Consolidated National Corporation
Consolidated Fidelity Life Insurance Company
June 30, 1994
Page 3
contribution shall be appropriately grossed-up to compensate CFLIC
(or its successor in interest) for such Tax.
Provided ICH complies with its obligations under this letter
agreement, if, upon filing of the final Tax return for CFLIC and/or
Marquette for the Indemnified Periods and after the disbursement
from the Escrow Fund to CFLIC to pay the Taxes shown to be due
thereon, the then remaining balance of the Escrow Fund (including
any earnings thereon) shall exceed the actual liability for Taxes
of CFLIC and Marquette for the Indemnified Periods (exclusive of
any refund of Taxes attributable to any carryback of any loss
arising during any Indemnified Period), CFLIC shall promptly direct
the Escrow Agent to pay the excess to ICH. Provided ICH complies
with its obligations under this letter agreement, promptly upon
receipt thereof, CFLIC (or its successor in interest) shall pay to
ICH (i) the amount of any refund of Taxes attributable to any
capital loss carryback arising from losses recognized in the
Recaptures and the redemption of the CFLIC Securities and (ii) the
amount of any refund of Taxes attributable to any audit or
redetermination of Taxes of CFLIC or Marquette for the Indemnified
Periods. Any claim for refund of Taxes filed on behalf of CFLIC or
Marquette for the Indemnified Periods shall include an application
for electronic funds transfer of such refund to an account jointly
designated by the parties hereto.
If it is determined, whether as a result of an Internal
Revenue Service audit or otherwise, that CFLIC (or its successor in
interest) has positive earnings and profits for federal income tax
purposes as of the date hereof and after taking into account the
Recaptures and the redemption of the CFLIC Securities, then ICH
shall pay to CNC (or its successor in interest) an amount equal to
the Taxes attributable to or payable as a result of any distribu-
tion to its shareholders of the amount of such earnings and profits
by CFLIC or its successor in interest, whether pursuant to section
1375(d) of the Internal Revenue Code of 1986, as amended, or
otherwise.
Except for the matters specifically addressed in this letter
agreement, the obligations and agreements of the parties in the
1993 Agreement shall remain unmodified and in full force and
effect.
<PAGE>
Consolidated National Corporation
Consolidated Fidelity Life Insurance Company
June 30, 1994
Page 4
If the foregoing is an accurate understanding of our agree-
ment, please execute both originals of this letter agreement and
return it to the undersigned.
SOUTHWESTERN LIFE CORPORATION,
(formerly known as I.C.H. Corporation)
By: /s/ Robert L. Beisenherz
_____________________________________
Title:
__________________________________
AGREED TO:
CONSOLIDATED NATIONAL CORPORATION
By: /s/ Robert T. Shaw
_______________________________
Title:
____________________________
CONSOLIDATED FIDELITY LIFE INSURANCE
COMPANY
By: /s/ Jerry W. Rice
_______________________________
Title:
____________________________
<PAGE>
<PAGE>
EXHIBIT 2.22
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement") made as of June 30,
1994, by and among SOUTHWESTERN LIFE CORPORATION (formerly I.C.H.
Corporation), a Delaware corporation ("ICH"), CONSOLIDATED FIDELITY
LIFE INSURANCE COMPANY, a Kentucky insurance company ("CFLIC") and
MID-AMERICA BANK OF LOUISVILLE AND TRUST COMPANY, a Kentucky
banking corporation ("Escrow Agent").
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, defined
terms that are used herein shall have the meanings assigned to them
in that certain letter agreement of even date herewith by and among
ICH, CFLIC and Consolidated National Corporation ("CNC"), a copy of
which is attached hereto as Exhibit A (the "Letter Agreement").
2. DEPOSIT OF ESCROW FUND. ICH hereby deposits $8,825,000
in immediately available federal funds with Escrow Agent as a fund
to be held in escrow hereunder (the "Escrow Fund"). Subject to the
provisions contained in Section 3 hereof, Escrow Agent shall hold
the Escrow Fund to fund ICH's obligations under the Letter
Agreement to pay Taxes of CFLIC and Marquette. Escrow Agent shall
invest the Escrow Fund in Repurchase Accounts (as defined below)
and shall hold such Escrow Fund until the disbursement by Escrow
Agent of the entire Escrow Fund in accordance with Section 3
hereof, for the benefit of ICH and CFLIC. ICH shall be entitled to
all of the income earned in the Escrow Fund (the "Income") and ICH
and CFLIC agree that the Income shall be considered taxable to ICH
for income tax purposes; provided, however, that the Income shall
be disbursed pursuant to Section 3 as a part of the Escrow Fund.
For purposes of this Escrow Agreement, the term "Repurchase
Accounts" shall mean repurchase accounts under which Escrow Agent
agrees to sell, and ICH agrees to purchase, certain direct
obligations of, or obligations that are fully guaranteed as to
principal and interest by, the United States or any agency thereof
(hereinafter, "Securities"), in the amount of such balance and at
maturity, ICH will sell and Escrow Agent will repurchase the
Securities at the same price at which they were sold to ICH,
payable immediately; plus interest payable to ICH. The approximate
market value of the underlying Securities will be 102 percent of
the Escrow Fund.
3. DISPOSITION OF ESCROW FUND. Disbursements from the
Escrow Fund shall be made by Escrow Agent in accordance with and
within two Business Days (as defined below) after receipt of a
written notice (the "Payment Notice") from CFLIC that a payment for
Taxes is to be made pursuant to the terms of the Letter Agreement.
The term "Business Day" shall mean any day except a Saturday,
<PAGE>
Sunday or any day on which commercial banks in Louisville, Kentucky
are required to close by law.
4. RESPONSIBILITIES OF ESCROW AGENT. Escrow Agent's duties
and responsibilities shall be limited to those expressly set forth
in this Escrow Agreement. Escrow Agent shall have no responsibili-
ty for listing any securities in its possession as part of the
Escrow Fund for ad valorem taxes, and ICH and CFLIC, jointly and
severally, agree to indemnify and hold harmless Escrow Agent from
and against any taxes, interest or penalties asserted against
Escrow Agent for its failure to so list such securities. Escrow
Agent is acting hereunder as a depository only and shall not be
responsible or liable in any manner whatsoever for the sufficiency,
correctness, genuineness or validity of any instrument which Escrow
Agent in good faith believes to be genuine, or for the identity,
authority or rights of any person executing or delivering such
instrument. Notwithstanding any provision herein incorporating
other instruments by reference, except as expressly set forth in
Section 3 hereof, Escrow Agent shall not be charged with notice of
the terms of any such instruments and its duties and responsibili-
ties shall be determined solely by reference to this Escrow
Agreement.
5. NO PERSONAL LIABILITY OF ESCROW AGENT. In performing any
of its duties hereunder, Escrow Agent shall not incur any liability
to anyone for any damages, losses, or expenses except for actions
taken or not taken in bad faith, willful default or gross negli-
gence, and it shall accordingly not incur any such liability with
respect (i) to any action taken or omitted in good faith upon
advice of its counsel given with respect to any questions relating
to the duties and responsibilities of Escrow Agent under this
Escrow Agreement, or (ii) to any action taken or omitted in
reliance upon any instrument, including, but not limited to any
Payment Notice or other written instructions contemplated herein,
not only as to due execution of such instrument and the validity
and effectiveness of its provisions but also as to the truth and
accuracy of any information contained therein, which Escrow Agent
shall in good faith believe to be genuine, to have been signed or
presented by a proper person or persons and to conform with the
provisions of this Agreement.
6. EMPLOYMENT OF COUNSEL. ICH and CFLIC, jointly and
severally, hereby agree to indemnify and hold harmless Escrow Agent
against any and all losses, claims, damages, liabilities and
expenses, including reasonable costs of investigation and counsel
fees and disbursements, which may be imposed upon Escrow Agent or
incurred by Escrow Agent in connection with its acceptance of
appointment as Escrow Agent hereunder, or the performance of its
duties hereunder, including any litigation arising from this Escrow
Agreement or involving the subject matter hereof.
<PAGE>
7. ESCROW FEE. The fee for Escrow Agent for its services
hereunder shall be based upon the schedule of fees maintained from
time to time by the Escrow Agent and shall be paid by CFLIC
promptly upon its receipt of a statement therefor from the Escrow
Agent.
8. RESIGNATION OF ESCROW AGENT. Escrow Agent may resign by
giving thirty (30) day prior written notice to ICH and CFLIC; and
thereafter, subject to the right of Escrow Agent to be paid its
reasonable fees for services and to be compensated for its proper
expenses and costs, the resignation of Escrow Agent shall become
effective and it shall deliver any remaining money held by it in
connection therewith upon the joint written order of the parties
hereto, and, upon the delivery of such money against the written
receipt thereof by the party so designated, Escrow Agent shall be
fully released and acquitted of any further obligation and
responsibility under the Escrow Agreement.
9. INDEMNIFICATION. In the event of a disagreement between
the parties hereto, resulting in claims and/or demands being made
by the disputing parties which, in the sole judgment of Escrow
Agent are conflicting, in connection with any matters involving or
affected by this Escrow Agreement, Escrow Agent shall be entitled,
at its sole option, to refuse to comply with any such demands so
long as such disagreement shall continue. Escrow Agent may
continue to refuse to take any action, irrespective of the time
which elapses during which such dispute continues, until either the
rights of the disputing claimants have been duly adjudicated and
Escrow Agent shall have received a certified copy of a final
judgment of a court of competent jurisdiction with respect thereto,
or the disputing claimants shall have furnished to Escrow Agent
joint instructions with respect to the action to be taken. If
Escrow Agent receives such joint instructions and shall be fully
protected and indemnified by the parties hereto in taking any
action in reliance thereon. All actions taken by Escrow Agent
pursuant to any final order of a court of competent jurisdiction
shall be conclusively presumed to be taken in good faith. In no
event shall Escrow Agent be required to file an interpleader or
similar type or action or to defend any action or legal proceeding
filed against it, but it may do so in its sole discretion.
10. NOTICES. All notices, demands, orders or other direc-
tions to be given under this Escrow Agreement shall be in writing,
shall be signed by the persons giving them and shall be deemed
sufficiently given only if sent by certified mail, postage prepaid,
return receipt requested, and addressed as follows:
<PAGE>
If to ICH, to:
Southwestern Life Corporation
500 North Akard Street
Dallas, Texas 75201
Attention: Robert L. Beisenherz
If to CFLIC, to:
Consolidated Fidelity Life Insurance Company
4211 Norbourne Blvd.
Louisville, Kentucky 40207
Attention: Jerry W. Rice
If to Escrow Agent, to:
Mid-America Bank of Louisville and Trust Company
500 West Broadway
Legal Department
Louisville, Kentucky 40202
Attention: John Rippy, Vice President
or at such other addresses or the attention of such other persons
as any of the parties may designate to the other by written notice
given in the manner provided above.
11. ENTIRE AGREEMENT. This Escrow Agreement constitutes the
entire agreement between the parties hereto with respect to the
subject matter hereof.
12. NO ORAL CHANGES. This Escrow Agreement may not be
changed, amended, waived, discharged or terminated orally, but only
by an instrument in writing signed by all parties hereto.
13. SUCCESSORS AND ASSIGNS. This Escrow Agreement shall
inure to the benefit of and be binding upon the respective parties
and their respective successors and assigns. Escrow Agent shall
not be bound by or charged with notice of any transfer or assign-
ment, in whole or in part, by a party hereto or its successors or
assigns of any rights hereunder, unless written notice thereof
shall have been given to Escrow Agent in accordance with Section 10
hereof.
14. COUNTERPARTS. This Escrow Agreement may be executed in
any number of counterparts, each of which when executed and
delivered shall be an original, but all such counterparts shall
constitute one and the same instrument.
15. GOVERNING LAW. The Escrow Agreement shall be construed
in accordance with, and shall be governed by, the laws of the
Commonwealth of Kentucky.
<PAGE>
16. SECTION HEADINGS. The Section headings contained herein
are inserted for convenience only and shall not control or offset
the meaning of construction of any of the provisions hereof.
IN WITNESS WHEREOF, ICH, CFLIC and Escrow Agent have cause
this Escrow Agreement to be executed and delivered in their names,
by an individual thereunto duly authorized, as of the day and year
first above written.
SOUTHWESTERN LIFE CORPORATION
(formerly I.C.H. Corporation)
By: /s/ Robert L. Beisenherz
_______________________________________
Robert L. Beisenherz
CONSOLIDATED FIDELITY LIFE
INSURANCE COMPANY
By: /s/ Jerry W. Rice
_______________________________________
Jerry W. Rice
MID-AMERICA BANK OF LOUISVILLE
AND TRUST COMPANY
By: /s/ John Rippy
_______________________________________
John Rippy, Vice President
<PAGE>
<PAGE>
EXHIBIT 2.23
AMENDMENT NO. 4
TO
COINSURANCE ANNUITY AND SUPPLEMENTAL
CONTRACT REINSURANCE AGREEMENT II
THIS AMENDMENT NO. 4 TO COINSURANCE ANNUITY AND SUPPLEMENTAL
CONTRACT REINSURANCE AGREEMENT II is made and entered into by and
between EMPLOYERS REASSURANCE CORPORATION of Overland Park, Kansas
("CORPORATION") and SOUTHWESTERN LIFE INSURANCE COMPANY of Dallas,
Texas ("REINSURED"),
WHEREAS, effective June 30, 1990, CORPORATION and REINSURED entered
into a Coinsurance Annuity and Supplemental Contract Reinsurance
Agreement II ("Original Reinsurance Agreement") and Amendment No.
1 thereto ("Amendment No. 1") under which REINSURED ceded and
CORPORATION assumed certain annuities and supplemental contracts
written by the REINSURED; and
WHEREAS, effective December 31, 1991, CORPORATION and REINSURED
entered into Amendments No. 2 and 3 to the Original Reinsurance
Agreement; and
WHEREAS, CORPORATION and REINSURED wish to further amend the
Original Reinsurance Agreement, to amend Amendment No. 2 thereto
and to delete Amendment No. 3 thereto,
NOW, THEREFORE, in consideration of the premises and the mutual
promises of the parties hereto, they hereby covenant and agree as
follows:
1. ORIGINAL REINSURANCE AGREEMENT. The Original Reinsurance
Agreement is amended to delete Articles XIV and XVI thereof in
their entirety.
2. AMENDMENT NOS. 2 AND 3. Amendment No. 3 is deleted in its
entirety and Amendment No. 2 is amended as follows:
(a) ARTICLE V.
(i) The first unnumbered paragraph following subparagraph
(3) of Article V is amended to insert a period following the word
"altered" and to delete the phrase "except as permitted by the
following paragraph".
<PAGE>
(ii) The second unnumbered paragraph following subpara-
graph (3) of Article V and subparagraphs (a), (b) and (c) thereun-
der are deleted in their entirety.
(b) ARTICLE IX.
(i) Lines 5 and 6 of the second unnumbered paragraph of
Article IX are amended to delete the following phrases "less
deferred and uncollected net policy premiums, and less investment
income due and accrued on policy loans, and less the policy loans,"
(ii) The third unnumbered paragraph of Article IX and
subparagraphs (a) and (b) thereunder are deleted in their entirety.
(c) ARTICLE X.
(i) Subparagraphs (a)(ii), (a)(iii), (a)(iv), (b)(iv)
and (b)(v) of Section A of Article X are deleted in their entirety.
(ii) Subparagraphs (a)(ii), (a)(iii), (a)(iv), (b)(iv)
and (b)(v) of Section B of Article X are deleted in their entirety.
(iii) All of Section C of Article X is deleted with the
exception of the last unnumbered paragraph thereof.
(iv) The last unnumbered paragraph of Section C of
Article X is amended to read as follows:
"Section C INTEREST ADJUSTMENT. Additionally,
all payments made pursuant to Sections A and B
of this Article shall be credited interest at
an effective rate of 8%. Time for this inter-
est adjustment shall be measured from the date
of valuation. This adjustment is applicable
for estimated pre-payments as well as delayed
payments."
(d) ARTICLE XVI. Article XVI is deleted in its entirety.
(e) ARTICLE XVIII. Article XVIII is amended to read as
follows:
"RECAPTURE. By giving to the CORPORATION at
least 90 days advance written notice, the
REINSURED shall have the right to recapture
all or a portion of the business reinsured
hereunder. Such recapture shall become effec-
tive at the end of the following calendar
quarter.
(a) NEGOTIATED RECAPTURE FEE. Any recapture
fee negotiated pursuant to this Article shall
<PAGE>
be negotiated in good faith with due consider-
ation to federal income taxes, interest main-
tenance reserve and asset valuation reserve
effects on both parties. Recapture shall not
be unreasonably denied by the CORPORATION.
(b) PARTIAL RECAPTURE. In the event of a
partial recapture, as soon as practicable
after the date the partial recapture is effec-
tive, the CORPORATION shall deliver to the
REINSURED the Escrow Assets applicable to the
recaptured business and the amount of addi-
tional cash, if any, required to equal the
policy reserves less any negotiated recapture
fee.
(c) FULL RECAPTURE. In the event of a full
recapture, as soon as practicable after the
date recapture is effective, the CORPORATION
shall deliver to the REINSURED the Escrow
Assets and the amount of additional cash, if
any, required for the then book value of the
Escrow Assets (after adjustments for permanent
impairments through the date recapture is
effective) and additional cash to equal policy
reserves plus the amount(s) then due REINSURED
pursuant to Article X hereof, calculated as if
the recapture date were the end of the ac-
counting period.
The REINSURED shall owe the CORPORATION and
the CORPORATION is hereby authorized to reduce
the amount required in the preceding paragraph
by the sum of (1) any negotiated recapture fee
and (2) the carryover amount, if any, (with
interest thereon) existing hereunder pursuant
to paragraph 5 of Schedule 1-A, calculated as
if the recapture date were the end of an
accounting period, and (3) any amount(s) then
due the CORPORATION pursuant to Article X
hereof, calculated as if the recapture date
were the end of the accounting period."
(f) SCHEDULE 1-A EXPERIENCE REFUND. Schedule 1-A to Amendment
No. 2 is amended to read as follows:
EXPERIENCE REFUND
"1. General. The CORPORATION shall be obli-
gated to the REINSURED for an experience
refund (the 'Experience Refund') in an amount
<PAGE>
equal to 100% of the Formula Amount on the
dates set forth in Article X or on the date of
any recapture pursuant to Article XVIII.
2. Formula Amount. With respect to each
accounting period, the Formula Amount shall be
equal to 100% (80% for accounting periods
beginning January 1, 2001) of the excess (if
any, after reduction for any negative carry-
over described in paragraph 4 below) of (i)
over (ii), where (i) is the sum of:
(a) Premiums received by the CORPORATION with
respect to the policies reinsured hereunder;
(b) All investment income from the Portfolio,
as reported by the Corporation for statutory
accounting purposes;
(c) All capital gains (net of any capital
losses) realized in accordance with statutory
accounting principles on assets held in the
Portfolio;
(d) The net amount of 'unrealized capital
gains or losses and changes in non-admitted
assets and related items' with respect to the
Portfolio, as determined for statutory ac-
counting purposes;
(e) Any partial recapture fee paid by the
REINSURED to the CORPORATION as defined in
Article XVIII less any recapture fee paid on
the effective date of this Amendment No. 4 by
the CORPORATION pertaining to the business
reinsured;
(for the purposes of the foregoing clauses
(b), (c) and (d), statutory accounting princi-
ples shall be applied as the initial book
values of the assets in the Portfolio which
are the market values of such assets on the
first day of the calendar quarter in the which
the Effective Date of this Amendment No. 4
falls);
and (ii) is the sum of:
(a) All benefits paid by the Corporation with
respect to the policies reinsured hereunder;
<PAGE>
(b) Expenses paid to the REINSURED with re-
spect to the policies reinsured hereunder and
the Portfolio, including expense commissions
and expense allowance to which the reinsurance
premium is subject pursuant to Article XII;
(c) The change (which shall be added if an
increase and subtracted if a decrease) in the
policy reserves on the policies reinsured
hereunder;
(d) State or local premium taxes paid by the
CORPORATION on the policies reinsured hereun-
der.
(e) If the Formula Amount for the immediately
preceding accounting period is less than zero,
interest at 2% per annum on that negative
Formula Amount.
(f) $40,000 per calendar quarter less the
interest amount, if any, resulting from item
(ii) (e) above. Such amount shall not be less
than zero.
3. Quarterly and Annual Calculations. The
Formula Amount and Experience Refund shall be
calculated and reported in accordance with
Article X.
4. Carryover Amounts. If for any year the
excess of 2(i) over 2(ii) is negative, the
absolute amount of such negative balance shall
be carried forward until absorbed by positive
Formula Amounts in future periods.
For the period immediately following the
accounting period for which 2(i) over 2(ii) is
positive, the amount in 2(ii)(f) above shall
be increased from $40,000 to $60,000.
5. Rules of Construction. In interpreting and
applying the provisions of this Schedule 1-A,
adjustments shall be made as necessary for any
provision of this Schedule 1-A to operate in a
manner that is consistent with the other
provisions hereof, so as to avoid inequitable
results in the nature of double-counting or
failing to recognize costs or benefits that
may enter into the calculations hereunder
through multiple provisions. The parties agree
to cooperate in good faith in resolving any
<PAGE>
issues that may arise with respect to the
calculations pursuant to this Schedule 1-A."
3. EFFECT OF AMENDMENTS. Except as expressly amended herein, the
Original Reinsurance Agreement, Amendment No. 1 and Amendment No.
2 shall remain unchanged and in full force and effect.
4. EFFECTIVE DATE. The Amendment No. 4 shall be effective April 1,
1994.
5. ENTIRE AGREEMENT. The Original Reinsurance Agreement together
with Amendment No. 1, Amendment No. 2 and this Amendment No. 4
constitutes the entire agreement (collectively "Entire Agreement")
between the parties hereto with respect to the business being
reinsured thereunder and there are no understandings between the
parties other than as expressed in the Entire Agreement. Any
changes or modifications to the Entire Agreement shall be null and
void unless made by amendment to the Entire Agreement which is
signed by or on behalf of both parties hereto.
6. COUNTERPARTS. This Amendment No. 4 may be executed in two or
more counterparts, each of which shall be deemed to be an original
copy hereof but all of which together shall constitute a single
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 4 to be executed on the dates indicated below.
SOUTHWESTERN LIFE INSURANCE EMPLOYERS REASSURANCE
COMPANY CORPORATION
By:/s/ John T. Hull By: /s/ James D. Maughn
________________________ ________________________
Title: Exec. Vice Pres. Title: SVP & Actuary
_____________________ _____________________
Date: 6/29/94 Date: 6/30/94
_____________________ _____________________
By: By: /s/ Chuck Schnieders
________________________ ________________________
Title: Title: Vice President
_____________________ _____________________
Date: Date: 6/30/94
_____________________ _____________________
